Why Russia and China Do Not Act on Syria

In a recent interview with the Business Insider, I said that "problems in Iran and Syria are 'wonderful for the Russian economy.'" I meant it.

Adam Taylor's article, "For all the bluster, these three reasons show Russia's position on Iran may be surprisingly sane" explores well why Russia is interested in the ambiguity around Iranian nuclear program. In brief, two things to keep in mind: the unstable region means higher oil prices (good for Russia), and Iran as a neighboring Islamic nuclear power means an imminent threat to Russia beyond any American's imagination (bad for Russia). After all, world economics and politics are a fine art of balancing, and that's what Russia is doing; playing a dangerous game, one that's paying off well so far with Putin's balanced federal budget.

The new unstable player of the region is Syria, and many Americans, including Secretary of State Hillary Clinton, cannot wrap their mind around Russian and Chinese stance of non-involvement. The situation is similar to the one with Iran and Libya, but if one takes a closer look, it is different and only "better" for Russia and China. Suffering and dying of innocent people are of course bad things; however, they are bad only for the people experiencing them. The Russian Orthodox Church, led by a former colleague of Putin, condemns the violence, but would also remind you that there is a lot of suffering in the world, and the best immediate thing we can do is just pray for the victims. Gadhafi was a stabilizing force in his country, and NATO's help to the Libyan rebellion meant instability (higher oil prices, better budget in Russia). Gadhafi was a Russian ally, and Russia faced the loss of a $4 billion weapons contract. However, that monetary loss was offset by the significant increase in oil prices, and Gadhafi's old age helped Russia shape its decision to control the timing of his imminent "departure."

Syrian President Bashar Hafez al-Assad (coincidentally born on September 11) is a different animal. His leadership means instability in the region, for which American farmers are paying at the gas pumps, and with which Russian members of parliament are balancing the books. So, if the case of Syrian nation's slaughter is monetarily good for Russia, why would the Chinese go along? After all, they import oil as well. That's where many reporters (and Secretary Clinton) forget a small detail of a very large transaction that took place seven years ago.

Do you remember the dismantled Yukos and jailed Mikhail Kohodorkovsky? Did you know that in 2005 Russian government's Rosneft bought out Yukos' assets in a closed auction after Western courts ruled the possibility of such transaction illegal? Then Yukos' and Khodorkovsky's lawyers were successful in winning court cases in America that made it impossible for a German bank to go ahead and lend billions to Russian government's oil corporation Rosneft. The decision came nearly 24 hours before the auction, and created a peculiar situation for the Kremlin; the situation that Chinese helped resolve, literally, overnight. Chinese gave the Kremlin the needed credit which is being paid off not with money but with crude oil deliveries locked at that day's historically cheap price.

As long as President al-Assad's regime causes instability, oil prices stay high; the Russian budget is balanced and Chinese gain the competitive advantage. The situation is nearly ideal for Russia and China, and is the result of a series of decisions that stretch as far as 2005.

One can argue that it is unethical to swap the killing of innocent people in exchange for financial and regional stability of a few nations. However, that argument needs to be weighed against such words as "democracy," "terrorism," "oil," "influence," "Iran," "Afghanistan," "Lybia," "Bosnia," "NATO"... The reader is welcome to mix and match these words to justify the death of hundreds of thousands of civilians in these countries, but should also keep in mind that President Assad is Syria's president, and no other nation technically has the right to meddle in his nation's affairs.

Bill O'Reilly says that "spin stops here." Maybe it does in his studio, but it's the opposite in the real world of business, politics, and policy. It's all about the spin.